AUD - Australian Dollar
The Australian dollar enjoyed a tumultuous and volatile ride through trade on Thursday, crashing to fresh 17-year lows at 0.5510 during the domestic session before surging higher overnight. The daily high low range was the fourth largest in over 30 years with an 8% gap between the bottom and top of the daily chart. Markets began to demonstrate some semblance of stability as investors appeared to stop and take a breath, stepping back from the panic that has enveloped the AUD through the last fortnight. The RBA, ECB and Bank of England all announced considerable Quantitative Easing platforms, while the Federal Reserve created a fund specifically designed to ease the current liquidity strains. It seems the glut of global fiscal stimulus and the coordinated monetary policy response is finally beginning to bite.
Having touched intraday highs at 0.5927 the AUD opens this morning at 0.5740 as attentions remain squarely affixed on global risk trends as markets dismiss macroeconomic data sets. Having plunged over 10 cents in the last fortnight the recent moves have clearly overshot fair value estimates and as liquidity pressures ease and panic subsides there is certainly scope for the AUD to correct higher. The overnight bounce could mark the beginning of the correction, however as the spread of the coronavirus around the global continues at pace we can reasonably expect the AUD will face downside risks. Watch resistance on move approaching 0.5930 and 0.60 with support at 0.54 and 0.5260.
The Dollar index gained through trade on Thursday despite a mixed performance against major counterparts. Having pared recent gains against the AUD, CAD and NZD the worlds base currency advanced against the euro and Japanese yen as the ECB unveiled extensive QE support and risk sentiment forced the JPY lower. The ECB announced it would step up its bond buying program, committing to purchase an additional 80 billion euro per month into the end of the year. The 750-billion-euro package signals the fastest rate of bond buying in the ECB’s history, outstripping the measures adopted in the wake of the GFC. Falling through 1.09 the euro plunged to intraday lows at 1.0662.
Attentions remain squarely affixed to broader risk trends and with COVID-19 continuing its rapid spread across the world with a large uptick in new cases reported in the US on Thursday, we can reasonably expect demand for risk will remain subdued. However, the improvement in risk appetite on Thursday suggests a tentative stabilisation across currency markets could be at hand. Watch for stability across bond markets and a sustained recovery across equities as signals the recent overshot may begin to unwind.
0.5510 - 0.5980 ▲AUD/EUR:
0.5050 - 0.5650 ▲GBP/AUD:
1.9720 - 2.0720 ▼AUD/NZD:
0.9980 - 1.0220 ▼AUD/CAD:
0.8050 - 0.8650 ▲